239. Telegram From the Department of State to the Embassy in Saudi Arabia1

458. Embtel 654.2 We do not think there is any significant lack knowledge on part American petroleum industry concerning fact Saudis in market for offers in available oil concession areas.3 We believe initiative re bidding for concessions best left to companies. Any indication USG interest likely be misunderstood and taken as official encouragement that they enter the competition.

FYI. Occurs to us relative lack interest by American firms derives from some or all following factors: (1) generally poor results oil exploration efforts Red Sea area to date; (2) focus of interest on proven Persian Gulf area; (3) rumors that Robert Ray geophysical work for Saudis either improperly done or has produced unpromising results, or both; (4) unwillingness attempt match French (RAP) offers at time when French known be seeking new production sources assiduously and therefore probably willing offer extremely generous terms. Informal discussion with Aramco officials here has established their agreement this analysis. End FYI.

Rusk
  1. Source: National Archives and Records Administration, RG 59, Central Files 1964-66, PET 10-3 SAUD. Limited Official Use. Drafted by Officer in Charge of Economic Affairs in the Office of Near Eastern Affairs George M. Bennsky; cleared in draft by William D. Wolle (NEA/NE) and Chief of the Fuels and Energy Division in the Bureau of Economic Affairs Office of International Resources Andrew F. Ensor; and approved by Davies. Repeated to Dhahran.
  2. Telegram 654 from Jidda, March 10, reported that Saudi Petroleum Minister Shaykh Ahmad Zaki Yamani had asked an Embassy officer why U.S. oil companies were not showing interest in available Saudi petroleum concession areas. (Ibid.)
  3. For documents relating to U.S. international oil policy, see Foreign Relations, 1964-1968, vol. XXXIV, Documents 175ff.